NiSource is reporting a net income in 2009 of $217.7 million or basic
earning per share of 79 cents, compared to a net income in 2008 of $79
million or basic earnings per share of 29 cents.

For the fourth quarter of 2009 NiSource is reporting a net income of $89.5
million or basic earnings per share of 32 cents, compared to a net income of
$162 million in the year-ago period or basic earnings per share of 59 cents.

Meanwhile, 2010 may become known as the year of the rate case for NiSource’s
subsidiary, the Northern Indiana Public Service Company. Not only does
NIPSCO expect the Indiana Utility Regulatory Commission (IURC) to issue an
order later this year in its pending electric rate case—the company is
petitioning the IURC for an increase in residential customers’ rate of 14.34
percent—it also plans to file two brand-new rate cases in 2010: a
second electric rate case but also a natural-gas rate case, both previously
announced.

Skaggs

“Our team’s exceptional execution enabled NiSource to not only weather the
storm during 2009 but to emerge as a stronger, more robust company,”
NiSource President and CEP Robert Skaggs said in a statement released today.
“Despite unprecedented dislocations in the financial markets and a very
challenging economic environment—particularly in our Northern Indiana
markets—our company’s underlying business performance remained strong, our
liquidity position improved significantly, and we produced tangible results
from our core strategy to build shareholder value and deliver long-term,
sustainable earnings growth.”

“Through our revenue growth initiatives, as well as aggressive cost
management efforts across all our businesses, we mitigated a significant
portion of the impacts of the economic recession,” Skaggs said. “Our ability
to deliver on our financial commitments in the face of a tough economy
underscores the resilience of our core regulated businesses and is a
testament to the team’s disciplined execution of their business plans.”

“Without question, 2009 was a challenging year for NIPSCO,” Skaggs said.
“The company’s earnings were impacted by a significant increase in pension
expense, as well as materially lower industrial demand as a result of the
economic recession. Looking forward, we have a solid regulatory and business
plan for 2010 to restore NIPSCO’s earnings base and position it to grow in
the future. Executing that plan is a key priority for NiSource this year.”

“Although the landscape we face today is much more stable, and less
treacherous, than the one we encountered a year ago, 2010 will present its
share of challenges,” Sikagg said. “As we face those challenges and continue
the basic work of building and growing NiSource, I am convinced we do so as
a stronger company—one with a business plan that is compelling, balanced,
and tested.”

Rate Cases

If the IURC were to grant NIPSCO’s pending electric rate case, residential
customers would seen an immediate increase of 14.34, raising the average
monthly bill by $12.76, from $81.68 to $94.44. Under the proposed hike,
residential customers would shoulder the greatest part of the increase, as
the overall hike, when spread among NIPSCO’s residential, commercial, and
industrial customers, would total only 9.8 percent.

NIPSCO expects to file a second electric rate case later this year. “The
filing will include the effect of increased pension expense, as well as
demand levels based on more recent operating experience, among other items,”
NiSource said. “New rates from this case are expected to be effective in
2011.”

And NIPSCO expects to file a natural-gas rate case this year. It would be
the company’s first since 1987, with new rates anticipated to be effective
late in 2010.

Financing and
Liquidity

“NiSource’s financing and liquidity position continued to improve during the
fourth quarter of 2009,” the company said, will the issuance of $500 million
of senior unsecured notes on Dec. 4, proceeds from which will be used by
NiSource to complete the refinancing of outstanding long-term debt scheduled
to mature in 2010 and 2011. “The company continues to maintain its $1.5
billion revolving credit facility that extends to July 2011.”

The company’s debt issuance followed a decision by Moody’s Investors Service
to affirm the company’s investment grade credit rating of Baa3 and raise its
outlook to stable, NiSource said. “Moody’s cited the successful resolution
of a variety of rate proceedings by NiSource’s gas utilities and the
management of the company’s liquidity position as major influencing factors
for raising NiSource’s outlook to stable.”

Operating Income
2009

•Gas distribution: $327.8 million ($336.1 million in 2008).

•Gas transmission and storage: $388.5 million ($369.7 in 2008).

•Electric: $116.7 million ($219.2 million in 2008).

•Other: an operating loss $14.5 million (an operating income of $2 million
in 2008).

•Corporate: an operating loss of $16.6 million (an operating loss of $8.3
million in 2008).

•Total: $801.9 million ($918.7 million in 2008).

In 2008 NiSource reported losses from discontinued operations and on the
disposition of discontinued operations of $290.8 million.

Operating Income
4Q

•Gas distribution: $114.5 million ($147.2 million in the year-ago period).

•Gas transmission and storage: $116.1 million ($104.7 million in the
year-ago period).

•Electric: $32.9 million ($48.7 million in the year-ago period).

•Other: an operating loss of $8.6 million (an operating income of $700,000
in the year-ago period).

•Corporate: an operating loss of $7.5 million (an operating loss of $2
million in the year-ago period).